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The financial alchemists at Macquarie Group, Australia's biggest investment bank, never managed to turn lead into gold, but they hit on the next best thing: turning asphalt into cash. In May, the bank's shareholders welcomed a $1.3 billion profit, thanks largely to a new way of looking at highways, airports and power stations.

The idea behind the Macquarie model is to borrow a lot of money cheaply, buy infrastructure assets with a guaranteed cash flow, then sell those assets to the public, letting shareholders take over the debt. Macquarie and imitators like Australia's Babcock & Brown make money at every step, with fees for the deal, for advice, and for managing the assets. Macquarie runs toll roads in America, bridges in Portugal, French autoroutes, a tunnel in Germany, and airports from Sydney to Copenhagen. About 290 million people ride its buses each year, and 17 million light its gas.

For investors, all this looked good, because roads and bridges with little competition should produce a steady return via tolls for generations. But with asset prices falling and easy debt a thing of the past, some believe the Macquarie model is in for a shakeup. JP Morgan's Brian Johnson says it is "likely dead."

Macquarie insists that its distributions to shareholders are paid strictly from cash, but other analysts say they're often funded by new rounds of refinancing. Steve Johnson, a former Macquarie staffer turned financial adviser, says the bank has managed to borrow ever-rising sums against its assets because "credit markets were more and more willing to lend. That game is over."

Macquarie's investments are much broader than infrastructure, and new CEO Nicholas Moore argues that with little exposure to Wall Street's problems and $14 billion in cash, the bank can easily refinance debts. The recent credit crunch, however, has made the market cautious. On Oct. 14 Macquarie Group's shares were trading at around $24 ($A35), two-thirds off their peak of $85 in May 2007. And Babcock & Brown had tumbled from around $28 to $1.20.B&B runs $55 billion worth of infrastructure assets, including ports in Britain, an Irish phone company, real estate across Italy, France, Germany and Japan, a fleet of jets, Australian gas, American rail stock, even a telecom cable under San Francisco Bay. Now the credit crunch is forcing it to sell off assets to cut its debt, estimated to total $35 billion.

"They built their house on the beach," says Tim Morris, an analyst with stockbroker WiseOwl.com. "Now that the storms have come, they can't help but watch their house subside into the ocean." And Macquarie? More diverse sources of revenue mean "it's better built to weather the storm," Morris says. But the borrow-to-buy infrastructure model "is dead in the water."

High debt levels aren't the only problem with the Macquarie-model funds, according to a tough review by corporate governance service RiskMetrics. It found that the funds also pay too much for assets and charge too much in fees, and that their operations lack transparency. "Our real concern is disclosure," says director Dean Paatsch. "The investment funds are asset vehicles that have outsourced 100% of the assets' management to a third-party company, but the terms � are not known."

Paatsch says that in the current market turmoil, the lack of such information erodes confidence. Investors whose shares in a fund lose most of their value would normally want to sack the manager, but with the Mac model, "you don't know what your options are." In the case of B&B Power, for example, "if you sack the manager you'd end up in the ridiculous situation where you'd pay them 25 years' worth of management fees — that's crazy." The review also noted that the funds are allowed to act in ways that normal companies are not, paying dividends, for example, from capital or borrowings rather than profit.

In B&B's case, warnings had been sounded for some time, including from inside the company. In an internal memo published in Australia's Fairfax newspapers in August, a disgruntled executive complained of a "culture of greed." In other companies, he wrote, "acquired projects are actually required to generate a certain benchmark return before bonus payouts take place. Instead, we have created an environment where senior people are rewarded for ... ginning up rosy projections to justify their rewards.''

B&B says it's got the message that it needs to change, but it doesn't agree the Mac model is dead. It is sacking a quarter of its 1,600 staff and selling off assets like Spanish wind farms and a Tasmanian power station. New CEO Michael Larkin says deals will be curtailed and executive pay based solidly on "investment outcomes." It remains to be seen if those remedies have come in time to save the patient.

Submissions called for on FTA with US(Submissions close on December 8)

Press Release by New Zealand Government at 3:13 pm, 15 Oct 2008

The Government is inviting submissions on New Zealand's upcoming FreeTrade Agreement negotiations with the United States as part of theTrans-Pacific Partnership (currently called the P4), Trade Minister PhilGoff said today.

The negotiations were announced in New York on 22 September, following ameeting between Mr Goff, United States Trade Representative Susan Schwaband trade ministers from Singapore, Chile and Brunei (the other P4countries)."The US is the world's largest economy, with more than 270 millionconsumers with a very high average income, notwithstanding recenteconomic difficulties," Phil Goff said."It is New Zealand's second largest export market. Total trade with theUS in the year to June 2008 was worth $8.14 billion, accounting for 9.6per cent of New Zealand's overall total trade. That means this deal isof huge significance to New Zealand.

"An American study on the impact of an FTA with the US, the BergstenReport, published in 2002, estimates that New Zealand exports to the USwould rise by $1 billion."That figure is indicative only. With its membership likely to expandfurther, the Trans-Pacific Partnership will likely bring much greaterbenefit for New Zealand and the US. The strategic benefits to the US should win bipartisan support for the agreement and ensure that it isboth high quality and comprehensive in nature."

In the current world economic climate, improving market access for Kiwiexporters, and the boost to growth, jobs and confidence that thisprovides, makes this negotiation and proposed agreement criticallyimportant."The more favourable New Zealand exchange rate will also boost exporterconfidence. New Zealand's export future however, relies not on cheapnessbut on quality and innovation."Essential to this is the encouragement of research and developmentpromoted by both Labour's 15 per cent tax credit for R and D and the$700 million Fast Forward Fund for the primary sector."National's promise to eliminate these policies is incomprehensible,"Phil Goff said.

"Our major exports to the US, dairy and meat, will benefit significantlythrough the removal of export quotas."Horticultural exports to the US worth $370 million last year currentlyface tariffs of up to 23 per cent. They will also be significantbeneficiaries."Fish and seafood, industrial products, metal products, wood, pulp andpaper account for more than $1.5 billion in New Zealand exports to theUS.These too will be able to trade into the US at lower cost."New Zealand companies will also be able to bid for US Governmentprocurement contracts, worth an estimated $200 billion a year."One example of facilitating new opportunities for New Zealand exportersis in the US Territory of Guam, where US Marines are transferring tofrom Okinawa over the next five years. This involves contracts of around$14 billion for work such as building and support services around thenew base.

An FTA with the US could allow New Zealand companies to bid directly forDefense Department projects."Our high tech companies will also benefit. Christchurch-based TaitElectronics last week welcomed the advantages an FTA with the US wouldbring, allowing them to bid for US Government contracts, currentlyblocked under the Buy American Act."Tait said this would greatly reduce the time and effort taken to meetUS regulations to export its radio equipment into the US. It would alsoallow it to bring its manufacturing base back from Texas to NewZealand," Phil Goff said."Public submissions are an essential part of a consultation process thatwill take place as the negotiations proceed.

The negotiations are due tobegin in March 2009, and are expected to be completed within 12 to 24months," Phil Goff said.Background to the negotiations and an online submission form areavailable on the Ministry of Foreign Affairs and Trade Website,mfat.govt.nz.

HELEN. DON’T JUST STOP AT SAVING ST JAMES STATION FROM FOREIGN OWNERSHIP

The Campaign Against Foreign of Aotearoa (CAFCA) congratulates the Government for buying the St James Station for the explicit purpose of keeping it from falling into foreign ownership.

This proves that its 2005 Overseas Investment Act is not working. At the time that was touted as affording protection to “iconic” land. The Government obviously doesn’t trust its own law to do that when it opted to spend $40 million to buy St James. In fact, all that Act does is put up a few more hoops for foreign buyers to jump through but it doesn’t actually stop them buying land, iconic or otherwise.

There is a simpler, and much cheaper, solution than ad hoc multi-million dollar purchases to prevent NZ land being sold overseas – institute a legal regime that much more severely restricts foreign ownership of land, or ban it outright. That is the logical conclusion of what the Government has done in the case of St James Station and we call upon it to admit that and put such a regime in place as soon as possible.

The proposed expansion of the Trans-Pacific Strategic Economic Partnership (NZ, Chile, Brunei, and Singapore, commonly known as the P4 Agreement) to include investment and financial services, and to add the US to its membership, was bad enough.

But for this to suddenly morph into a fullblown Free Trade Agreement with the US is catastrophic for any remaining economic sovereignty that New Zealand has. We say this not because we are “anti-American”. All such FTAs – such as with China, or the existing P4 partners, for instance - pose the same threat to a greater or lesser degree. And our opposition to them is not because of “xenophobia” but for well founded grounds that they simply enmesh NZ more and more tightly in a cobweb of transnational corporate control.

So it’s a recipe for disaster to enter into an FTA with the biggest economy in the world, headed by a Government that aggressively pushes the interests of American Big Business (there is a seamless flow between the US Government and US Big Business, as is evidenced by the current trillion dollar bailout of the mega-greedy financial sector, a textbook example of socialism for the rich).

A full blown US FTA will:

Remove any remaining “restrictions” on foreign investment, as the US regards NZ’s (purely token) oversight regime as “discriminating” against US transnational corporationspush up the price of medicines by potentially hundreds of millions of dollars a year by attacking Pharmac;make access to digital recordings more expensive, and copying more restricted;attack our GE controls and food labelling,weaken our controls on food imports where they might carry diseases.

Both Labour and National myopically see a US FTA as being the Holy Grail of their adherence to the cargo cult of “free trade”. It’s actually a poisoned chalice and it will be New Zealand which will be poisoned by it.

Waihopai spybase - it's not all bad The spy base at Waihopai has certainly generated its fair share of controversy over the years. About 30km outside Blenheim on the Waihopai Valley Road, the base, with its two white globes, has stood in the Waihopai Valley since 1989, writes The Marlborough Express in an editorial.The Waihopai spy base is operated by New Zealand's Government Communications Security Bureau. Exactly what goes on at the base is not 100 percent clear but its two satellite interception dishes (shielded from public view by giant domes) are said to intercept a huge volume of telexes, faxes, emails and computer data communications. Opponents of the base believe it is part of Echelon, the worldwide network of signals interception facilities run by the American and British intelligence agencies.

They do not want New Zealand to be part of Uncle Sam's spy network, and were particularly fired up by revelations found in former prime minister David Lange's papers that this country spied on friendly countries in the 1980s.

Anti-base campaigners say the base's existence makes New Zealand complicit in America's wars. Some say it is the key contribution New Zealand makes to any American war anywhere in the world, and leaves New Zealand with blood on its hands. It also places an unreasonable burden on New Zealand taxpayers, who have paid about half a billion dollars in the last 20 years.The spy base has been the site of protests over many years. Every year it is the venue for an annual protest that sees a group of protesters stand around outside its gates with placards, yelling slogans and generally just expressing their displeasure at the base.

The base attracted international attention on April 30 when three sickle-wielding protesters broke on to the site and deflated one of the large inflatable domes covering a radar dish. The men were members of Ploughshares, a London-based movement which delivers its disarmament message by attempting to disable warplanes and other military equipment.The group describes itself as "people committed to peace and disarmament and who nonviolently, safely, openly and accountably disable a war machine or system so that it can no longer harm people". Whether the Waihopai spy base can truly be called a "war machine" or whether it really "harms people" is debatable.

The Waihopai Satellite Communications Station is part of a signals intelligence alliance between New Zealand, Australia, Canada, the United States and the United Kingdom. It plays a vital role for New Zealand in being a part of that international network, which directly benefits New Zealand. Experience over the past few years shows that it is better to be forewarned than forearmed. Intelligence gathering plays a significant role in tracking extremists and has been proved worthwhile internationally.

The spy base employs local people, it does not emit any poisonous gases or spill pollutants into the soil or rivers. If it were not for the annual protests most people would not really give a hoot about it. There are valid concerns that privacy could be invaded by the base's interception of communications. But if that interception of communications was responsible for saving a life then having two oversized golf balls in our backyard is a small price to pay.

`Waihopai 3' to face court after attack on spy base The year 1980 was pivotal for American peace activist Philip Berrigan.

He was no stranger to controversy. Thirteen years before, he was the first Catholic priest in the United States to serve time for civil disobedience six months in jail for a graphic protest against the Vietnam war. He and three others had saturated military service papers with their own blood.

In September 1980, Berrigan's beliefs were undiminished.

With seven others, he entered a factory in Pennsylvania that made cones for nuclear warheads. They attacked the cones with hammers, then poured their blood on official documents before offering prayers for peace.

Their anti-war protest was the first carried out in the name of Ploughshares.The word is from the prophet Isaiah in the Old Testament.Looking into a distant, peaceful future Isaiah said: "They shall beat their swords into ploughshares, their spears into pruning hooks; nation shall not lift sword against nation; and there shall be no more training for war."

Berrigan and his associates were charged and imprisoned. They never denied what they had done, but tried to use the biblical reference as justification.

A ploughshare is the cutting edge of a plough. In essence, they were calling for the tools of war to be turned into the tools of peaceful productivity. Isaiah's vision was to be fulfilled not buried in the scriptures.

Since 1980, there have been up to 100 similar Ploughshares' protests around the world.On January 1, 1991, mainstream New Zealand was introduced to Ploughshares.In the lead-up to Washington's first war with Iraq, an unknown 22-year-old from Christchurch made headlines when she was arrested in the United States.

Moana Coles and three others had cut their way into the Griffiss military base in New York, hammered on aircraft and the runway, poured blood and spray-painted anti-war slogans.They were the first to put the acronym ANZUS in front of the Ploughshares name, saying they wanted to create "a new pact for peace".Coles spent time in jail and eventually was deported.

Now, back in Christchurch, she stands by the action."I would argue that our analysis wasn't wrong. The infrastructure of Iraq was destroyed, 50,000 kids died in the bombing of Iraq in 1991, and a further couple of hundred thousand children under the age of five have died since because of the sanctions.

"So this was a war that broke international law, and we would say that as Christians we had an obligation to put our bodies in between those weapons and those who were going to be killed by them. And we have no choice about that if we are serious about our faith."

Silence and inaction are complicity in Coles's eyes.

At least one of the Waihopai Three 68-year-old Peter Murnane from Auckland, himself a Catholic priest supports the notion.

He believes the scripture does imply a duty. "The more I read about Iraq, the awfulness and the size of the crime, the first Iraqi war in 1991, and then the 12 years of sanctions or more, and then the second war, were designed to destroy that country. And any little thing I can say against those who do it, or the weaponry or the intelligence network that is combining to enable those things, anything I can do, I'll do."

Not all Ploughshares activists are religious, but it is Catholics, more than any other Christians, with whom the movement is most closely associated. Within the Catholic Church though, few openly support its activities.

Christchurch's most senior Roman Catholic, Bishop Barry Jones, told The Press not many would condone the wilful destruction of property. "I think they are misguided in the sense that they go too far. You could make a symbolic protest and it could be very effective without breaking any laws at all.

"And lots of people have done that through history. I did it when the Springbok tour was on, and I didn't break any law, and I protested like mad." In some Ploughshares' cases courts have taken a liberal view.

In July 2006, an Irish jury acquitted a group of criminal damage to property. Five activists had broken into Shannon Airport in County Clare, beating on an American supply plane with hammers and pouring their own blood over it.

The airport's use as a "pitstop" for American troops in Iraq was largely unknown in Ireland and the five used the case to highlight what they viewed as complicity in the war machine.They argued their protest was necessary to prevent worse crimes.

The jury essentially agreed that in the circumstances damaging the plane could not be considered a crime.

However, the April, 2008, action against the Waihopai spy dome may be more complicated. For one thing, it was against an intelligence installation, not a weapon of war. Moana Cole, now also a lawyer and Sam Land's legal representative, accepted that this particular case was different."It is quite an unusual Ploughshares' action, and up until now, for those groups who have identified themselves with Ploughshares activists, it's always been against a weapon or a weapons' system," she said.

"What one has to do then is try to explain quite carefully the role of intelligence in modern warfare, which has had increasing prominence in the modern age ... and particularly since 1991 where intelligence bases play a strong part in military alliances."

The Waihopai Three will have to convince the court the moral argument is relevant.They are charged with causing intentional damage and entering a building with the intent to commit a crime.

Bishop Barry Jones said it was about contravention of a just law. For him, breaking a law to liberate someone from torture was one thing, political protest another."The greatest contribution that citizens can make to peace in society is to observe the rule of law. Otherwise, instead of having a peaceful and harmonious and secure society, we have a shambles," he said. "If everyone is free to go around and break the law because they have noble instincts, life is going to be very tricky."

Father Peter Murnane will not be convinced. "We didn't bomb anything, we didn't blow up a family," he said. "In a minor way to break a law, to damage a bit of property is trivial in comparison. Is he (Jones) concerned about the destruction of people, of generations of human beings? It is a matter of proportion. No law is sacrosanct in that sense, no property is sacrosanct."

Peter Murnane, Sam Land and Adrian Leason will appear in the Blenheim District Court for a depositions hearing on Thursday.

This page has the details of how you can support Waihopai Ploughshares around their depositions hearing which will be held at Blenheim District Court on Thursday, 18 September. There are four sections below: what's happening in Blenheim on 17 and 18 September, supporting events in Wellington and Auckland on 18 September, and other ways you can support Ploughshares.

"On 30 April, Christian activists Sam, Peter and Adi deflated the protective dome covering a satellite dish at the Waihopai spy base near Blenheim. This Christian non-violent direct action was to protest against NZ's involvement in America's war in Iraq. On the 18th of September, they will be in court for their depositions hearing where they will enter a plea in relation to the two criminal charges they are facing. Your prayers and support are appreciated."Blenheim, 17 and 18 September

Other ways you can support PloughsharesPrayer, advocacy and money are all important ways that supporters can participate in the witness of Ploughshares. Ploughshares support information - including a request for prayers / karakia, how to post messages of support or join the Ploughshares mailing list, and suggestions for questions you can ask the Prime Minister about Waihopai - are available on the Ploughshares web site or by email.

If you can help with financial support, donations can be made * by bank transfer: WestPac, Account Name: Te Wairua Maranga Trust, Account Number: 03-1703-0036346-04 - donations are not tax-deductible * by cheque: please send your cheque payable to 'Peace Movement Aotearoa - Special Projects', with a note saying it is for Waihopai Ploughshares, and your name and address (if you'd like a receipt) to Peace Movement Aotearoa, PO Box 9314, Wellington 6141. Thank you

Note that the regular analysis of the decisions of the Overseas Investment Office, which are published in every Foreign Control Watchdog are not republished here because they are available on the web site of the Campaign Against Foreign Control of Aotearoa (CAFCA).

If you are feeling anxious — and you should be — about the world’s appetite for nuclear weapons, there is a bit of good news. More countries than we ever expected are refusing to be pressured by the United States and India to approve an ill-conceived nuclear deal.

For 30 years, ever since India used its civilian nuclear program to produce a bomb, the world has been banned from selling nuclear technology to India. Three years ago, President Bush agreed, with far too few conditions, to break that ban and sell India reactors and fuel.The White House argued that India is an important democracy and shrugged off critics who said that breaking the rules would make it even harder to pressure Iran and others to abandon their nuclear ambitions.

The administration — and India’s high-paid lobbyists — managed to persuade Congress to give preliminary approval to the deal. But before it can go forward, the 45-member Nuclear Suppliers Group (which sets rules for nuclear trade) must also agree.

At a meeting this month, more than 20 governments delayed approval, raising serious questions and insisting on sound conditions. They insisted that there can be no sale to India of technology to make more nuclear fuel — usable for a reactor or a bomb — and that suppliers halt all trade if India tests another weapon. And they insisted that India accept the most rigorous possible international monitoring of its civilian nuclear facilities.

We hope this admirable band — led by New Zealand, Ireland, Austria, Norway, the Netherlands and Switzerland — continues to stand firm when the nuclear group meets again this week.Mr. Bush and his team were so eager for a foreign policy success that they gave away the store. They extracted no promise from India to stop producing bomb-making material. No promise not to expand its arsenal. And no promise not to resume nuclear testing.

When Congress gave its approval it wrote in the many of the same conditions that New Zealand and others are insisting on. That has not stopped the administration from insisting on more generosity from the suppliers group. If it gets its way, India could end up buying technology from Russia, France and other less exacting sellers while bypassing the United States. Add that to the list of what is deeply wrong with this deal.

As the country emerges from another winter with threatened power blackouts, Mike White investigates why one factory, the Tiwai Pt aluminium smelter, is allowed to swallow nearly 15 per cent of the country’s precious electricity and asks whether it’s time they shut up.

He wore a serious suit and a whiff of hair product. She wore black, and the rimless glasses of generations of librarians.Paul Hemburrow and Xiaoling Liu had come to Parliament’s finance select committee with dark dress and a grave message from their employer, aluminium colossus Rio Tinto Alcan (formerly Comalco): Carry on with your climate change legislation and we’ll have to close our aluminium smelter at Tiwai Point near Bluff.Ms Liu, Rio Tinto Alcan’s Asia Pacific president of primary metal had jetted in, in a show of strength from the world’s biggest aluminium company.But the most telling line was left to Paul Hemburrow, the 38-year-old Australian who heads the company in New Zealand and is the smelter’s general manager.“What we are saying is that if the bill proceeds as it’s currently written, it is likely to put us on the pathway to closure.”In the velvet-gloved world of political lobbying and PR, this bore all the subtlety of cudgelling MPs with a fencepost.Hemburrow’s argument was that being asked to share a portion of the country’s greenhouse gas responsibility was a financial bridge too far, leaving it so cash strapped, so marginal, it would have to shift elsewhere.What may not have been understood by many, as Rio Tinto Alcan offered this scenario of gloom and grief back in May, was the company’s obligations would be heavily subsidised, only having to pay 10 per cent of its 2005 greenhouse gas emissions until 2019 - it wouldn’t have to pay its full dues until 2030. Moreover there would be two reviews of the scheme to ensure it wasn’t an unfair imposition.Nor would many have been aware that Rio Tinto Alcan New Zealand, which owns nearly 80 per cent of New Zealand Aluminium Smelters (the remainder owned by Sumitomo Chemical Company of Japan), is hardly on the verge of collapse – with aluminium prices soaring to over US$3000 a tonne (having nearly doubled since 2004), last year it had revenue of $1.1 billion and profits of $204 million. Its parent company, Rio Tinto, is scarcely an international sprat either, last year having paid US$38.1 billion for Alcan to dominate world aluminium production. It’s the world’s third largest minerals company, has operations in 61 countries, 25 other smelters and its 2007 profit was US$7.4 billion.Fewer still would have bothered to do the sums, as economist Rod Oram did, that suggest even with an extremely high price of carbon the eventual cost to the company would actually be minimal – around 3 per cent.And as people shivered at the thought of Southland’s second largest employer disappearing after nearly four decades, it’s a fair guess that most wouldn’t have realised Hemburrow’s tactless threat was an echo of one made by successive smelter chiefs: Push us, squeeze us and we’ll piss off.***

This is how aluminium is made:Bauxite, a pebbly red material, is mined and refined into a white powder, alumina. This is then dumped into a chemical bath, simmering at nearly 1000 degrees C, through which huge amounts of electricity are passed causing a reaction that creates aluminium and spills off CO2. It’s clever, but it ain’t new – the technique that nearly all the world’s 260 smelters still use was invented in 1886, has changed little and simply relies on enormous quantities of electricity – in Tiwai’s case close to 15 per cent of everything used in New Zealand or the amount used by 625,000 homes.This is how a smelter is made:In 1956, Australian company Consolidated Zinc approached the New Zealand government about constructing a smelter, indicating it would come here if guaranteed a large source of electricity.Serendipitously, as early as 1904 the government had considered the hydroelectric potential of Lake Manapouri, buried in the Fiordland heartland, so the two ideas were meshed and the parties became industrial dancing partners. Initially Consolidated Zinc (which soon became Comalco) was going to build both the Manapouri power station and a smelter at Tiwai but by 1961 said it didn’t have enough money so the government built the power station.However a special Act was passed in 1963 giving the company rights to the station’s power for 100 years.In 1969 the first electricity was generated from Manapouri and in April 1971 the first aluminium smelted at Tiwai.Today the fruit of that coupling can be seen south of Invercargill, where the Southern Ocean finally beaches itself after journeying from Antarctica.Twin columns of pylons carrying Manapouri’s energy loom from the landscape, straddle the road to the smelter in a quietly hissing colonnade, then swing off across flax fringed swampland, tiptoe across Awarua Bay and sling their wires for a further kilometre to the smelter, tucked in the curl of Tiwai peninsula across from Bluff.It essentially takes the entire output of Manapouri, our country’s largest hydroelectric power station, and pays roughly a quarter of what you pay for your power.For something that consumes so much of the country’s electricity, the smelter’s a disappointingly unremarkable destination with sulking buildings in variegated grey, as if all the colour has been leached from them after decades of industrial effort. Only a smoke stack rises from these lower case roofs, like an exclamation mark signalling the smelter’s steadfastness.Three strands of barbed wire atop a mesh fence and several warning signs make it clear this is smelter territory – its own world at the end of the world.Inside however some of the purest aluminium in the world is manufactured – up to 99.98 per cent unadulterated – with a third of its production used for cellphones, computers and the wings of the new Airbus A380 aircraft. (Some is also used for less exciting purposes, such as window frames and packaging foil.)The smelter is essentially four lines of “pots” – the cells where alumina from Australia is constantly mixed with Manapouri electricity. At Tiwai, 672 pots produce about 350,000 tonnes of aluminium annually – just under one per cent of the world’s production. Nearly 90 per cent of this is shipped to predominantly Asian markets from a wharf that stretches into Bluff Harbour like a half-submerged fenceline.Though you can stare down an entire 600m potline and see nobody, such is the quiet, almost subterranean process of aluminium smelting, the site employs 915 fulltime staff and contractors and studies estimate another 1600 Southland jobs may rely on the smelter’s existence.Locally, it’s considered a good employer – more than 100 staff are members of its 25-year club, a handful having worked there since it started, and it paid $78 million in wages last year with its average pay higher than the area’s mean.It contributes to the community in many other ways, from school science fairs to helping save the kakapo and you’d struggle to find opponents to it along Invercargill’s pavements.The irony is though, the smelter was born amidst controversy, has attracted criticism throughout its life, and still, somehow, finds itself defending its right to be here. Because not only does the smelter often threaten to quit the country, others have long called for the government to show it the door.***

Deep deep beneath Lake Manapouri, the hum of the power station becomes a controlled roar the closer you get to its heart. Seven massive turbines are constantly spun with water that’s plummeted 166m from the lake’s surface and then, it’s job done, set flowing 10km through the mountains to be discharged into Doubtful Sound. It’s one of New Zealand’s great engineering feats but it came at a great cost with 16 men being killed - and almost at the price of a great lake.Initial plans for the power station that would feed Tiwai’s smelter called for Lake Manapouri to be raised by up to 30m.The country’s largest environmental protest, including a 265,000-strong petition, eventually saved the lake from what’s now unthinkable desecration.Save Manapouri became a slogan for a generation and ushered in a new era of environmental awareness.The smelter was inevitably sullied by association with the plans but it was its operation and tactics that soon became the focus.In 1970 it was revealed preferential Comalco shares had been offered to influential New Zealanders including politicians, local councillors, judges and journalists.Public concern rose as it emerged how cheaply Comalco was getting power and how many breaks it had been cut by a government desperate to lure foreign investment.Its favoured status was reinforced in 1972 when electricity supply to Dunedin was disrupted so the smelter could maintain production.Later studies showed the smelter paid minimal tax until the mid-1980s, because of depreciation allowances in its agreement with the government.The country’s growing intolerance of such colossal projects became evident when a second smelter proposed for Aramoana near Dunedin in the 1970s was canned for economic and environmental reasons after huge protest.Rio Tinto’s controversial involvement in international events, from dealing with Spain’s fascists in the 1930s to the mired events of Papua New Guinea’s Panguna Mine, has also tarnished the current owner’s image over the decades.The organisation now known as Campaign Against Foreign Control of Aotearoa (CAFCA) was born largely from opposition to the smelter and how its owners were seen to be ripping off New Zealand.More than 30 years on, spokesman Murray Horton still beats a drum calling for action against the smelter.After Rio Tinto’s appearance at the select committee Horton issued one of his inimically blunt press releases headlined: “Rio Tinto, Stop Crying Wolf. Just Close The Bluff Smelter & Bugger Off.”Horton objects to both the cheap price Rio Tinto Alcan pays for such a large chunk of the country’s electricity and also how successive governments have flinched every time the corporate has flexed its muscle through heavyweight lobbyists and heavy-handed threats.“Effectively what we’re doing is exporting electricity that they get at top secret, dirt cheap prices. And whenever that’s put under threat they threaten to walk.“They’ve outwitted all the governments since Holyoake and when New Zealand industry was thrown open to the bracing winds of market forces and economics in the ’80s none of that affected Comalco. They’ve always been big fans of corporate welfare – ie. you and me subsidising their electricity – it’s the biggest bludger in the country.”Back in the ’60s at a time when the smelter was being built, Horton stood shoulder to shoulder on the front lines of anti-Vietnam War protests with Tim Shadbolt.Today, however, they face each other across the lines, Shadbolt now Invercargill’s mayor and cheerleader for the smelter.“The thought of it closing is frightening. We’re less dependent on it now than in the ’70s and ’80s when one in four jobs was associated with the smelter – now it’s only about one in 10 – but it’s still hugely significant.”Shadbolt has strong historical attachment to the issue – after protesting against the lake being raised he worked on the Manapouri tunnel project for a year during his university days.“Manapouri was built for the smelter and the smelter was built for Manapouri. So they kind of have a historical right that we’re quite protective about. We built Manapouri for our own benefit really and most of the workers were from Southland or Invercargill. It was a man a mile getting killed and all the New Zealanders killed were Southlanders. So we feel we made the sacrifice, we did the work specifically for the smelter and we should have first right to the electricity.”And he admits the council tries to keep Rio Tinto happy because the multinational “wouldn’t worry for more than two seconds whether it stays open or closes. I’ve met the directors – to us it’s a huge deal, to most New Zealanders it’s at least a recognised deal, but to Rio, well, it doesn’t really matter.”Thus, building a new $12 million bridge to the smelter is the latest example of corporate appeasement borne by ratepayers.“But I still respect and like guys like Murray Horton because they’re patriots in a way, they’re looking at the national interest and you need people like that. And I guess I’m paid, my job is to look after Invercargill’s interests - so I’m a mercenary and he’s an idealist in this situation, so I have to respect him.”***

But what would happen if Rio Tinto did leave, as they’ve threatened and as others are calling for them to do?For a start, you wouldn’t be able to use half of Manapouri’s power anywhere else. Constraints on the national grid mean you couldn’t get more than about 300MW further north than Roxburgh without a significant upgrade of transmission lines.Estimates for this work vary between $40 million and $200 million (depending on whether a new line of pylons is needed) and consents could take years to be granted. While Transpower, the state-owned company that runs the national grid, is looking at such scenarios, no upgrade is imminent.And though Southland’s booming dairy industry could soak up some of Manapouri’s output, its demand would be tiny compared to the electricity hungry beast that is the smelter.Secondly, even if we could get the power to places like Auckland where it’s most needed, it wouldn’t solve the country’s current shortage of electricity generation, but only delay the need for more windfarms or geothermal plants. New Zealand’s electricity needs are growing by around 150MW a year, so closing the smelter would mean we mightn’t have to build anything for about four years. But then, without significant reduction in our power use, we’d be back to where we are now, worrying if we have enough power to get us through a dry winter.Electricity Commission chairman David Caygill says calls for the smelter to be shut down so we can claw back a large chunk of electricity are a knee jerk, not a sensible, long-term view.“It’s almost a panic response – the only thing we can think of.”Thirdly, smelter supporters say that if Rio Tinto left they’d simply re-establish the smelter in a country like China, where its power would probably come from a greenhouse gas emitting coal-powered station, not carbon free hydro like Manapouri. Thus, they argue, the world would be better off if they stay here.However one obvious scenario would be that if we had Manapouri’s power to use across the rest of the country we could greatly reduce our use of coal and gas such as at the Huntly power station which produces about 12.5 per cent of the country’s power. Doing this would save the country millions in carbon credits needed to meet our Kyoto obligations and arguably balance the emissions a relocated smelter in China might create.(Amongst Rio Tinto’s justifications for Tiwai has been exactly this suggestion of “carbon leakage” – that if things get too tough here it might go to China where there are laxer emissions rules and this would end up harming the world’s environment more. This blunt acknowledgement that company profits supersede environmental obligations tends to undermine claims in their sustainability report that they accept responsibility to work towards climate change solutions. Claims the smelter wishes to “show leadership” in responding to climate change also appear at variance with their suggestion in 2005 they build a 600MW coal-powered station to produce their own electricity at a time when they were negotiating a new power contract.)Fourthly, if the smelter closed, a cornerstone of Southland’s economy would be removed and with it, hundreds of jobs.However the effect may not be as bad as the smelter’s owners and its supporters have postulated.Southland’s economy is positively pulsating at present –farm prices have almost doubled in the last year; broadband is available in 96 per cent of the region; coffee brands jostle for supremacy on pavement sandwich boards and it’s a bugger of a place to get a park at peak times.Large developments are slated in the dairy, forestry and oil industries, the Bluff oyster beds are resurgent and the region is desperate for workers says mayor Shadbolt.With the lowest unemployment rate in the country (2 per cent), two recent economic reports predict it will need an extra 12,500 workers by 2016 just to maintain its current economic growth.So if the smelter closed few workers would end up on the dole, especially given claims the smelter would seek to redeploy skilled staff to its other operations overseas. (Though just how many Invercargill workers would opt to transfer to China or the likes of Libya where Rio Tinto has planned another smelter, is untested.)Nor is it as if Southland hasn’t suffered and survived other huge industry closures – not far from the smelter, Bluff’s Ocean Beach freezing works closed in 1991 with 900 jobs lost.And while the closure of Fisher & Paykel’s Dunedin factory (430 jobs) and Dannevirke’s Oringi freezing works (466 jobs) made headlines for a day or two earlier this year before the nation shrugged shoulders and carried on, jobs at Tiwai are considered almost sacrosanct by the smelter’s defenders.Steve Canny, group manager of economic development group Venture Southland, accepts the smelter may be a case of, good for Southland but crap for the rest of the country.But he says those in the deep south get irritated with “the shallow north” wanting electricity that underpins Southland’s economy without wanting power stations built on their patch.“I can understand how an urbanite in Auckland could be a bit nervous if the power started going out. But unless there’s substantial investment in a transmission upgrade and the not-in-my-backyard scenario is being addressed in major metros, then this discussion has no substance whatsoever.”***

So just how realistic are Rio Tinto’s threats to leave New Zealand? As mentioned, the company has a history of suggesting drastic action or departure when something upsets it.It did it when wanting to buy the Manapouri station; when the government proposed carbon taxes; during negotiations over electricity prices and most recently over proposed greenhouse gas emissions charges.Victoria University senior economics lecturer Geoff Bertram, who’s studied the smelter for more than 30 years, says the latest threat was lamentably predictable.“It was an example of the bully boy tactics Rio Tinto deploys very effectively. They’re probably the best of all the corporates at this game in New Zealand.“They have good political lobbying skills and an excellent PR machine and they’ve always played their trump card – if you’re horrible to us we’ll leave. If you have a genuine and credible threat like that you can play it as many times as the government’s prepared to cave in - political leverage is everything. And the New Zealand government is one of the weakest I’ve ever observed in this game – by international standards New Zealand’s a pushover.”Ironically Bertram’s office, with a career’s-worth of stacked documents threatening to avalanche and bury him come the next big earthquake, looks out on the Beehive where he says successive Ministers and governments have buckled before the smelter’s owners.“Were I the government I’d have long ago instructed officials to prepare a fully-costed contingency plan for compensating all the people that would suffer in Southland if the smelter closed. And when they came to me and said, ‘if you don’t do our will we’ll close the smelter,’ I’d be able to say, ‘all right, off you go, and I’m going to spend the necessary cash not on subsidising your operation but on making sure the ordinary New Zealanders who depend on you for a living can make a transition to a sustainable alternative – have a nice day.’”In two earlier reports, Bertram calculated the smelter had a negative economic impact on New Zealand in its first 20 years.Now, he says, on balance it’s probably had a moderately beneficial effect through taxes, wages, port fees and buying supplies locally.But he says its benefits are nothing compared to say the tourism sector yet the aluminium industry wields a much larger stick politically – vastly disproportionate to its actual economic contribution.“It’s the small business stuff that makes the New Zealand economy tick, it’s the big monopoly giants that make the government crawl.”Rio Tinto’s influence in New Zealand isn’t unique.In his book Running From The Storm, one of Australia’s foremost climate change commentators, Clive Hamilton, notes:“The (aluminium) industry has repeatedly managed to bully and bluff governments into giving it special concessions and has constantly retarded progress towards resolving the greenhouse issue. It has without doubt been the most self-serving, uncompromising lobby group in the climate change debate in Australia.”Rio Tinto has a bauxite mine, two alumina refineries and two smelters in Australia.Across Molesworth St from Geoff Bertram’s office, Climate Change Minister David Parker rejects the notion he’s unwilling to stand up to the smelter owners, insisting the government is determined to push through its emissions trading legislation and calling Rio Tinto’s claims “exaggerated” and “an idle threat”.“I think we all know that business is about money and in the end businesses are largely motivated by effects on their profit and loss. So they try and minimise things that increase their loss. And that’s what Rio Tinto’s doing here – I wouldn’t call it improper but I see it for what it is.“They’ve got a private interest in minimising the amount of responsibility they have to take for the cost of their emissions. Now, there’s a cost to the country for their emissions but from their perspective they’d rather the taxpayer bore the cost than them.“And I don’t think the burden upon them is large in relation to the profitability of their business.”Parker, who is also Energy Minister, says Rio Tinto is clearly only in New Zealand because it gets a competitive power price and the Tiwai smelter is in fact very well placed compared to other smelters that rely on electricity from coal and gas fuelled stations.“We don’t think they’ll close. I’ve got no doubt the country would survive (if it did) but it’s not something we’d have as an objective. It’s clearly a substantial employer and a substantial contributor to the Southland economy – but that doesn’t mean we’d have it there at all costs.”***

Paul Hemburrow insists he stands by his assertion that the smelter would end up closing under current emissions trading legislation. But given such certainty, he’s strangely reluctant to say when this might happen, merely suggesting “you can do the numbers” – a bizarre statement considering how secretive the smelter is about its costs.He stresses Rio Tinto supports emissions trading and is happy to pay its share – but just not unless all other smelters in the world face the same costs. (It should be noted the smelter has reduced CO2 emissions 42 per cent since 1990, despite upping production 27 per cent.)Nor will Hemburrow countenance suggestions the smelter gets cheap power let alone that taxpayers and other electricity users effectively subsidise the giant multinational.“The contract price we have is an outcome of a commercially very robust negotiation,” says Hemburrow wielding a shield of business jargon.“I think there’s a misconception it’s a particularly cheap price, because it’s certainly not.” Well, maybe not cheap in the hungry world of aluminium smelting – but certainly much cheaper than anyone else in New Zealand gets it would appear.Neither power supply company Meridian Energy or Rio Tinto will disclose the price the smelter pays, predictably insisting it’s commercially sensitive.But using industry figures and the smelter’s own accounts it’s possible to estimate roughly how much Rio Tinto pays for its electricity – somewhere between 5.2 cents and 5.9 cents a kilowatt hour.By comparison the average price for other industrial consumers in 2007 was 9.2 cents and residential customers 18.6 cents.The smelter’s current contract runs till 2012 but it’s already negotiated another deal from 2013 to 2030 with Meridian.Presently it has a fixed contract for about 90 per cent of its electricity, buying the remainder from the spot market, paying a price that can fluctuate wildly.Meridian is a state owned enterprise and returns dividends to the government so taxpayers have a legitimate interest in the smelter paying a top price for a national resource. So has Meridian done a good job on our behalf or is Rio Tinto getting fat at our expense?Well, the latest contract took three years of bargaining and Meridian is happy with it, saying it adds significant value to the company.And when one customer accounts for 40 per cent of your sales and is the biggest customer in the country by far, you’re going to give them a reasonable discount whether you’re selling spuds from a corner store or electricity from the deep south.However the fact Rio Tinto knows Meridian can’t sell much of Manapouri’s power to anyone else because of transmission constraints undoubtedly strengthens its hand in negotiations.For Rio Tinto, for whom electricity is 40 per cent of the smelter’s costs, it’s all about the bottom line.When predictions of power blackouts were swirling throughout autumn, Rio Tinto agreed to cut five per cent – and then another five per cent of its electricity consumption.While this was couched in terms of a generous gesture to help the country’s power situation the reality was it was primarily economic rather than altruistic. With spot prices leaping to over 30 cents a kWh, the smelter was keen to cut an unsustainable cost. When Meridian (who was running short of power to provide its other customers and being forced to buy extra on the expensive spot market) asked it to go a little bit further, it’s understood Rio Tinto was compensated for shutting down more pots.Reports that the cuts have cost the company millions of dollars should be seen in this light.As economist Rod Oram puts it, Rio Tinto gets “a hugely sweet deal”.He says the Tiwai smelter is in a fantastic position to market its aluminium as a green product, because its electricity doesn’t come from a coal gobbling power plant, and was amazed when it claimed the government’s emissions trading scheme could force the smelter’s closure.“Some particulars may need to be worked out but to leap from the particulars to the cataclysmic is incredibly bad strategy on their part.”Oram says just what economic benefit the smelter has brought to New Zealand has never been resolved because some of the numbers required for a full analysis remain secret.(Rio Tinto is currently preparing its own study to quantify the smelter’s value to the country and community, expected to be released shortly.)Many, including Geoff Bertram, suggest we must be able to use 15 per cent of the country’s electricity more efficiently and more profitably than in a single aluminium smelter that produces 4.5 per cent of New Zealand’s export earnings, employs just 0.06 of the country’s workers and sees all the profits go overseas.But Oram says it’s impossible to know whether this would be the case unless you could compare it with another economic activity that would use the power the smelter currently swallows.“On balance, I’m saying, well, it’s here, so we might as well make the most of it.”***

So while it might be an economic dinosaur, a harbinger of the country’s misjudged Think Big projects; while it might throw its weight about and expect privileged status; while its economic benefit is arguable, there seems little likelihood the smelter will waltz off in the near future.The reason why attention has again been focused on it this year is inarguably due to talk of tepid showers and blackouts. If the hydro lakes had been full and power plentiful, everyone would have happily ignored the enormous amount of electricity this one factory uses.But the hydro lakes weren’t full – in fact the inflow for the three months to mid-June was the lowest since 1947.Adding to the fact less power could be generated from hydro stations, another power station packed up and other plants were forced to reduce generation.To stave off power cuts it was necessary to kickstart an expensive diesel-fired emergency generator at Whirinaki and restart part of an asbestos-riddled plant in New Plymouth. For a country with a wealth of generation resources – rivers, strong winds and geothermal steam – our electricity system looked like a bogged up Lada limping through winter.And it’s hardly a new situation – there have been four winter shortages in the last eight years that led the smelter to cut production.But Energy Minister David Parker says that given it was such a dry year and given there were unforeseen plant failures, the fact we survived without blackouts shows how resilient the system actually is.Electricity Commissioner David Caygill, whose job it is to ensure a secure power supply, agrees, saying talk of a power crisis were largely a media beat up.“The words challenge or problem sound much less interesting.”Caygill who sits in a harbour-view Wellington office, ironically a few floors below the offices of Rio Tinto Alcan and Sumitomo Chemicals, says 4000MW of potential electricity generation is being built, consented or applied for – an enormous wave of power he’s confident will satisfy the country’s electricity demands into the future.Thus, talk of shutting down the smelter to save the lights going out is naïve and pointless, he says.And that’s possibly the final reality – if more generation comes on stream soon and talk of blackouts disappears, everyone will forget about the smelter and its arguably inefficient use of so much power.It may be a relic, it may even be a rip off, but maybe we just have to accept it’s here to stay.

This trade agreement between NewZealand and China fails to protect the sovereignty of the democratically elected Government of New Zealand, and it placessignificant restrictions on the future ability of the New Zealand Governmentand Parliament to pass regulations to protect the people and environment of Aotearoa New Zealand.There are many reasons why the New Zealand Government should not have signedthis preferential trade agreement with China, not least of which is the factthat New Zealand signed this agreement whileChina was involved in the murderous oppression of the people of Tibet. It isalso of grave concern that this agreement has no binding labour or environmental standards. The lower wages and standardsin China will effectively be a non-tariff barrier to fair trade, giving corporations that pollute or pay inhumane wages a competitive advantage overthose that do not.However, here I wish to focus on the investment provisions and expose the risks to our people, our environment, and our sovereignty. The investment chapter of the agreement, chapter 11, takentogether with the annex defining expropriation, annex 13, effectively formsa bilateral investment treaty between our two countries. This bilateral investment treaty inhibits the ability of the twoGovernments to regulate the businesses of foreign investors without compensating those investors for the cost of those regulations.The investment treaty means that a Chinese corporation operating in New Zealand can sue the New Zealand Government if the Government changes regulations, resulting in a loss of value for thatcorporation. And if there is a dispute between a Chinese investor and theNew Zealand Government as to whether the Government should compensate the investor, and to what extent, then the dispute is tobe resolved in an international forum established under the auspices of the World Bank or the United Nations.The effect of this investment treaty will be to place a chill over theability or willingness of the New Zealand Government and Parliament to regulate the business activities of Chinese corporationsoperating in New Zealand, for fear of facing binding claims for compensationin international tribunals. This will make it much harder for our Governmentto carry out its duty to protect and advancethe well-being of the people and environment of Aotearoa New Zealand.Bilateral investment treaties have received an increasing amount ofattention in the international law literature. This is for the simple reason that moreand more bilateral investment treaties arebeing signed, and more and more cases are ending up in international courtsor tribunals of one description or another. Corporations are suing Governments in international judicial hearings on aregular basis. In Canada, the University of Victoria's Faculty of Law has aninvestment treaty arbitration website that provides access to all publicly available investment treaty awards, and listsover 200 cases since 1996.It was long standard fare for treaties to protect corporations from expropriation; from the direct acquisition of a company by a Government without compensation. What is new is that now corporationsare successfully suing Governments for what they call "indirect expropriation". Indirect expropriation is where a Government changes laws orregulations, or acts in some way that impacts on acorporation's activities, resulting in loss of profits and hence value for that corporation. In these cases the owner's title to an asset is protected but the value of that asset declines.The New Zealand - China preferential trade deal contains two components thattogether constitute a bilateral investment treaty between New Zealand and China. Those are chapter 11 and annex 13. Thecore of chapter 11 is article 145, which, I imagine, almost none of the members of this House have read, except me. It says that the New Zealand Government cannot expropriate Chinese investors unlessthe expropriation is fully compensated, and vice versa. If there are any disputes between a Chinese investor and the New Zealand Government, the investor can seek redress at the International Centrefor Settlement of Investment Disputes or through the United NationsCommission on International Trade Law.Central to such disputes is the definition of "expropriation". Thisdefinition has been of critical importance to bilateral investment disputes overseas. There have been several cases wherearbitrators have deemed that measures taken to protect the environment have expropriated investors, and that is extremely and directly applicable tothis treaty. For example, in the case of Metalcladv Mexico, an international trade tribunal ruled that Mexico had violated theNorth American free-trade agreement in preventing Metalclad Corporation fromopening a hazardous waste treatment anddisposal site in Mexico. The tribunal found that local government oppositionto the project amounted to expropriation of the company's profits.Public protest against Metalclad's approval for the waste treatment led to local authorities investigating the potential environmental impacts of the treatment site. An environmental impactassessment revealed that the site was on top of an ecologically sensitive underground alluvial stream. As a result, the governor refused to allow Metalclad to operate the facility, and later declaredit part of an ecological zone.Metalclad claimed that this action effectively expropriated its future expected profits, and although it was awarded less than the $90 million in damages it sought, its claim was successful. Thereare more cases like this in international tribunals, and it is clear that measures taken by States to protect human health or the environment can be found by international arbitrators to beexpropriation, resulting in large financial penalties. The key question is whether State action to regulate is considered a form of indirect expropriation. The definition of expropriation is addressedin annex 13, which I cannot imagine many other people here have read. Thisis really at the core of the agreement and what it might mean for the abilityof the New Zealand Government to regulatewithout compensation.I will assess annex 13 from the perspective of its relationship to theability of a State to regulate when such regulation results in the partial loss of value to a Chinese investor's asset. Annex13 has five paragraphs. Paragraph 1 states: "An action or a series ofactions by a Party cannot constitute an expropriation unless . . . it interfereswith a property right". This is a simple testto meet. Most State actions would interfere with property investment whenthe State is trying to regulate, and it costs something. Paragraph 2(b) states that indirect expropriation occurs "when astate takes an investor's property in a manner equivalent to direct expropriation, in that it deprives the investor in substance of the use of the investor's property,". The kind of State actionwhere State regulation costs money to a corporation protecting theenvironment is exactly the kind that would be caught by paragraph 2.Paragraph 3 states: "In order to constitute indirect expropriation, the state's deprivation of the investor's property must be: (a) either severe orfor an indefinite period; and (b)disproportionate to the public purpose." Clearly, if the State was trying toregulate to protect the environment it would be permanent, and the question of whether it would be disproportionate wouldbe decided by an international panel. Whether the Government's judgment was allowed would be determined by an international disputes panel. Paragraph 4 states that if one targets a particular classof investor, one is very likely to get caught up in expropriating. That isan easy provision to meet if, for example, one targets a bunch of agricultural producers or dairy farmers and tries to cleanthem up.Paragraph 5 states-and this is probably what the Government is hoping will protect it-"such measures taken in the exercise of a state's regulatory powers as may be reasonably justified in theprotection of the public welfare, including public health, safety and the environment, shall not constitute indirect expropriation." Paragraph 5 givesthe appearance of protecting State action. Itsays that State actions to protect public welfare do not constitute indirectexpropriation. But there is an important exemption and an important qualifier. The exemption is that it does not cover thekinds of actions where any particular industry or class of investors is targeted. The qualifier is the term "reasonably justified". Even if theState action does not meet the terms of paragraph4-that is, targeting a class of investors-it must still be reasonably justified, and an international panel will decide whether the actions of theGovernment are reasonably justified. There is noteven any guidance.Once the exemption and the qualifier in paragraph 5 are included, the protection to State action looks weak. This is why Professor Matthew Porterfield from Georgetown University, an internationalexpert in trade law, said that in our agreement with China we are actually exposing ourselves to greater risk of legal action than the US Government faces under its investment clauses. So a closereading of chapter 11 and annex 13 makes it clear that any kind of NewZealand Government regulatory action that negatively affects the value of Chinese investors' assets is wide open to actionbeing taken against the New Zealand Government by the Chinese investors.Where the New Zealand Government action particularly affects a class of investors, then the Government's only defence is to show that its actions were proportionate to the public purpose intended.It will be up to an international panel to decide whether the action was proportionate, regardless of the view of the people or Government of New Zealand. Where a State action does not affect aparticular class of investors or is not in breach of a contract, then the Government has a better opportunity to win its case, but only if thetribunal agrees that the Government's action wasreasonably justified to protect public welfare. Thus, the New Zealand Government will have two lines of defence, but both of them involve convincing a non-elected, international panel that the actionsof the Government were proportionate or reasonable to achieve the public purpose desired.

The Campaign Against Foreign Control of Aotearoa (CAFCA) receives the monthly Decisions (i.e.approvals, plus the very rare refusals) from the Overseas Investment Office.

The OIO routinely withholds Decisions (which we appeal to the Ombudsman, sometime successfully) and it also routinely withholds details of those Decisions that it does release, usually the price paid by the foreign buyer.

However, in the latest batch of Decisions that we have analysed (January-April 2008) we have been able to calculate some of those purchase prices from the accompanying statistics supplied by the OIO.

EnviroWaste, owned by private equity corporation, Ironbridge through Barra Topco II Ltd, bought the 50% of Manawatu Waste it did not already own, and Ironbridge bought the shares it did not already own in Barra Topco II Ltd, for a combined total of $37,590,000.

Spy base data use violates sovereignty, says activist Information gleaned by the Waihopai Valley spy base is giving the United States an unfair economic advantage, says a visiting veteran activist from the Philippines.

Cora Fabros is the Asia/ Pacific Coordinator of the International Network for the Abolition of Foreign Military Bases and was in Blenheim yesterday.She is in New Zealand as a guest of the Anti-Bases Campaign and is visiting spy bases around the country. She is also speaking about the regional and global perspective on such bases.

The Waihopai base attracted international attention on April 30 when three sickle-wielding protesters broke onto the site and deflated one of the large inflatable domes covering a radar dish.

Yesterday the base was taking no chance with security. There were three police cars inside the gate, but they pulled away when Mrs Fabros arrived. Another police car was stationed further down the valley.

Police were keen to find out if the media, who were invited to the visit, were expecting more action.

But it was just Mrs Fabros and veteran ABC member Bob Leonard who pulled up in a rented car to spend a few minutes in front of the gates.

Mr Leonard said he was hoping to take Mrs Fabros up to the inner gate, but was told by the base that in light of April's attack public access was now curtailed.Mrs Fabros described April's attack as a "very creative" way of bringing attention to the facility."I really admire the courage of our friends who did this."

She said Waihopai was part of a network for the operation of military bases collecting data and information.

The base was spying on the communications of the Pacific Islands and the information was part of the pool of data used by the US.

"That to me is very deceptive and a violation of the sovereignty of independent nations.

"We are well aware of economic policies that are adopted by certain governments or policies imposed by the US on to another nation that give the US an undue advantage over an independent country because they are able to get this information without permission."

She said New Zealand, which prided itself on being nuclear free and playing a peacemaker role in the world, was providing support for the US military infrastructure.

"We are fighting a global superpower and we feel we need to highlight the issue, no matter how local people here think that it's a foreign issue. I continue to learn more about it and it's not a foreign issue."

Below is an article that appeared in the Otago Daily Times during Cora Fobros' tour of New Zealand. Further details of her visit can be seen on earlier posts.

Activist speaks against spy basesBy Sam Stevens

Created 09/07/2008 - 06:00

International Network for the Abolition of Foreign Military Bases (Asia-Pacific) co-ordinator Cora Fabros was in Dunedin yesterday to talk about the impact of foreign military bases on indigenous people. Photo by Peter McIntosh. While international espionage is often associated with hi-tech gadgets and fast cars, the reality is far less glamorous, says a Filipino activist, who began a national speaking tour in Dunedin yesterday.

At Dunedin Community House last night International Network for the Abolition of Foreign Military Bases Asia Pacific co-ordinator Cora Fabros spoke about the impact of military bases, specifically those maintained by the United States, on indigenous peoples world-wide.Ms Fabros also discussed facilities in this country, such as the Waihopai "spy-base" in Marlborough, and those at Tangimoana, near Palmerston North, and Harewood, Christchurch.

"It's a fringe issue in New Zealand and I hope the trip will provide a global and regional context, which might motivate people to take an interest in these activities," she said.

The operation of two large US military facilities in the Philippines for almost 100 years galvanised her opposition to foreign bases.

For many, the bases, which could accommodate up to 100,000 personnel, represented a virtual "occupation" by foreign powers and were symbolic of a loss of sovereignty, she said.However, for some Filipinos the "fall-out" from facilities is more tangible.

Near a decommissioned base in Mindanao, the second largest island in the Philippines, residents had been affected by pollution from asbestos and defoliant chemicals.Apart from respiratory illness, there was a high incidence of cancer in women and miscarriage, she said.

"When the bases closed about 15 years ago, negotiations did not really look at a clean-up plan. We regret that now."

Military expansion often meant funds were being diverted from core infrastructure in developing nations, she said.

Her seminars will be held in Blenheim, Wellington, Palmerston North and Auckland this month.

Enormous apologies for the lack of blogging. An absence from the blog since the 4th of July in inexcusable. So there's the apology over. Rest assured there are many decent reason (and several far fetched excuses) for the absence.

So here we go. We're a week out from finding out who is going to win both the American and the local National election. As a distraction from the propaganda being thrust from almost every direction, I shall exercise my democratic right to blog the last five months of issues that concern foreign ownership of Aotearoa.

Hope you enjoy - 2009 I promise will bring more up-to-date updates :-)